In addition, the analyst cut his iPhone sales estimates by 5 million units this fiscal year, similarly reducing iPad sales estimates by 2 million units.

"Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," Millunovich confirmed in an industry note.

Although Milunovich sees iPhone production tapering off to 25 million units in the first calendar quarter next year, he did emphasize that Cupertino could get an early pick-up in 2013 with a new iPhone 5S expected to launch next summer.

Frankly, I'm not at all surprised by Milunovich's assessment, which is likely spot on.

Moving forward, Apple will undoubtedly experience significant difficulty competing with the plethora of Android handsets on the market, all of which boast a wide variety of capabilities, form factors and price points, along with access to the rather expansive Google Play.